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Universal Basic Income: The Promise vs the Practicalities

Press release

31.3.2017

The March/April Intereconomics issue explores the controversial concept of a universal basic income (UBI). While some economists claim it is the only viable path forward for modern states, others assert that the UBI path only leads to state bankruptcy and strong work disincentives. Our Editorial sees glimmers of hope for Greece if the IMF and eurozone creditors can conclude the second review of the economic adjustment programme. Taking a look at such matters from the other side, an IMF researcher describes recent shifts in the Fund’s economic philosophy. Additional articles cover Brexit and trade, systemically important financial institutions, and income inequality. This issue's Letter from America examines the conflicting signals sent by the Trump administration regarding the strength of the US dollar.

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The 7th annual Intereconomics conference will be hosted at CEPS on April 20. The conference will explore the benefits that could be gained by granting the eurozone a fiscal stabilisation function, for example through a European unemployment benefits scheme. Top economists such as Clemens Fuest, Iain Begg, Paul De Grauwe and Frank Vandenbroucke will be joined by representatives of the ECB, the European Commission and the US Labor Department to debate the implications of such a move. Click here for details and registration.

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The idea of a universal basic income (UBI) has gained momentum in recent years. Proponents assert that a UBI will dramatically simplify and improve upon the current welfare state model. While the idea of a UBI is intriguing, real-world implementation is anything but basic. No serious answers have been found to the question of how to finance such a system, and economists are also concerned about the negative effects of a UBI on a person's willingness to work.

The last thing both Greece and the EU want is another round of brinkmanship and another replay of the Greek drama. In this issue's editorial, George Pagoulatos writes that the country desperately needs a sense of stability and a year of recovery to be able to see some light at the end of the tunnel. Thus, it is essential that the country's European creditors complete their review of the third bailout programme in a timely manner.

Mainstream economics has long focused on increasing economic growth while ignoring distributional concerns. However, Prakash Loungani writes that the consensus has begun to shift, and recent IMF research has paid increased attention to inclusive growth and the detrimental macroeconomic effects of inequality. The IMF also recognises the threat posed by climate change and has begun to dedicate research to exploring ways to decouple carbon emissions from economic growth.

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Quote of the Month

Given time and stability, the most extreme case of adjustment inside an imperfect currency union could eventually become a case study for the positive transformative power of an ever deepening European economic and monetary union.